The Evolution Of Fintech Is A Bare Necessity
By Pramshu Peri, Correspondent, BW Businessworld
In a panel discussion with industry experts, we get to know that the uptick in different forms of payments has promoted fintech companies to come up with new measures and employ sustainable technology to keep up with the pace.
Currency has undertaken many forms of evolution over the centuries.
From the traditional barter system, blocks of wood, and precious metals, it has witnessed a number of physical changes with convenience to its areas of origin and eventually lending itself to be used in the form of banknotes and coins.
Digitization has created a tectonic shift in payments. With the leverage of fast internet and affordable IoT devices, making financial transactions hasn’t been more effortless than today. While technology’s progressing at a rapid pace, fintech companies will have to buckle up and keep up with what’s trending amidst the large ecosystem of the payments market today.
“While the necessity of currency is to trade things, the concept is changing today,” said Rohit Razdan, Chief Business Officer of Clear Pvt. Ltd. (formerly ClearTax).
Invoices as a tradable security
While a lot of people use applications like UPI and Google Pay to make or receive payments, they only observe the transaction side of things but not the online receipts, which are invoices. “When invoices become interoperable, they themselves become tradable security,” said Razdan. Since data is the new oil, and fintech organizations process information that’s generated through numerous transactions, invoices become crucial to observe patterns and later employ technology to make their operations more efficient.
“When invoices get interoperable, they’ll create a whole lot of value to customers,” he added.
Technology is no longer just a driver of business today, but also the creator of various markets. From maintaining a sustainable operating model for managing payments, customer records, and integrated security. Shifting all of this to the cloud has reduced costs for many organizations, due to a reduction in capital expenditure for equipment and services.
“Due to the pandemic, cloud operations have become a bare necessity. Though the services on a wider scale are a bit expensive, I’m sure that the costs will come down over time,” said Vinit Teredesai, the chief financial officer of Mindtree Ltd.
The data centers perform the operations for them and give the required output for a far lesser cost, than investing in expensive, complicated devices for completing the relevant tasks. “Cloud takes away the responsibility of manually looking after factors that cannot be controlled by an organization in real-time,” he added.
But the caveat here, is since there’s an exponential shift of businesses to the cloud, a lot more servers are being installed globally. This brings up a bunch of sustainability concerns.
Evolution of Fintech
The advent of 5G is going to change a lot of things. From a grand reduction of latency to widespread promulgation of edge computing, there’s a lot on the table for technology to undergo due to 5G.
It’s no different here for fintech. “When we start adding technologies like AI and big data to fintech, that creates a very powerful solution from a future-trend perspective,” said Mayank Khandelwal, the Chief Financial Officer of NEC Corporation. While we may come at a time when facial recognition and other bio-metric facilities play a major role in increasing convenience, such as eliminating the very concept of credit cards, we can see the progress ramped up by the introduction of 5G in fintech.
It eases up infrastructure challenges in rural areas, where the reachability of networks is often limited.
Scalability for smaller enterprises
The last 12-18 months have been very hard for the financially underserved segments, such as MSMEs and small industries. They don’t have bigger cash reserves like larger corporations. Technology today has to be revamped in a way to match these segments’ supply concerns of capital, at times of seasonal increase in demand of their products. “Things like these are possible today because of the technology,” said Deepak Kothari, c0-founder and COO of Ftcash.
While in rural areas, where people stand in queues to withdraw cash and get their passbooks manually updated, it can all be done today with virtual interactions put in play by employing the necessary tech.
“India today is blazing with some of the fintech ecosystem drivers that put in place,” he added.